Although the family of chimaerin Rac-GAPs has recently gained significant attention for their involvement in development, cancer, and neuritogenesis, little is known about their molecular regulation. Chimaerins are activated by the lipid second messenger diacylglycerol via their C1 domain upon activation of tyrosine kinase receptors, thereby restricting the magnitude of Rac signaling in a receptor-regulated manner. Here we identified a novel regulatory mechanism for beta2-chimaerin via phosphorylation. Epidermal growth factor or the phorbol ester phorbol 12-myristate 13-acetate caused rapid phosphorylation of beta2-chimaerin on Ser(169) located in the SH2-C1 domain linker region via protein kinase Cdelta, which retained beta2-chimaerin in the cytosol and prevented its C1 domain-mediated translocation to membranes. Furthermore, despite the fact that Ser(169) phosphorylation did not alter intrinsic Rac-GAP activity in vitro, a non-phosphorylatable beta2-chimaerin mutant was highly sensitive to translocation, and displayed enhanced association with activated Rac, enhanced Rac-GAP activity, and anti-migratory properties when expressed in cells. Our results not only revealed a novel regulatory mechanism that facilitates Rac activation, but also identified a novel mechanism of cross-talk between diacylglycerol receptors that restricts beta2-chimaerin relocalization and activation.